SUBMISSION FROM WOMEN’S LEGAL SERVICE, BRISBANE
SUPERANNUATION AND FAMILY LAW – A POSITION PAPER OF THE COMMONWEALTH ATTORNEY’S GENERAL’S DEPARTMENT
August, 1998
Introduction * Overview * Key Issues *Inconsistency in approaches between negotiated settlements and court orders? * The presumption of a 50:50 * The exceptions to the 50:50 presumption * The family home * The need for an additional exception * Domestic violence * Legal Aid * Date of separation * Disclosure * Full and frank disclosure *Setting aside agreement * Registration of agreement * Defacto relationships * Contacts: Women's Legal Service Brisbane
A. Introduction
The Women’s Legal Service is a community legal centre developed and operated by women for women. Our work is grounded in and informed by women’s experiences of the legal system and recognizes the extent to which violence impacts on the lives of women at all levels of the legal system. We have been operating since 1984 and are involved in a range of networks at a local, state and national level.
We offer free legal advice, information and referral to women in Queensland both by telephone and face to face interviews. The Service employs staff with a variety of expertise including solicitors, social workers and community workers. There is a domestic violence worker who provides face to face and telephone counselling for women who have experienced domestic violence. She is also involved in a range of community development activities. The Service also has an 1800 telephone facility and a designated rural worker and this ensures that we have contact with women from rural and regional areas of the State. In 1997/98 we provided assistance to nearly 6000 women. Although we provide assistance to women on a range of legal matters, approximately 75% of our client contacts relate to the areas of family law and domestic violence.
Our position on the issue of Superannuation and Family Law has been developed through consultations with a sub-committee of our volunteers, who are lawyers who specialize in the area of family law in private practice and with members of staff and management committee.
Unlike other recent legislative changes in the Family Law area, the government’s reform agenda, refreshingly in this instance, is about trying to achieve positive change for women.
Many of the issues surrounding the division of superannuation entitlements after a separation are closely linked with the division of property generally. We understand that the government will shortly be releasing a discussion paper on reform to the property section of the Family Law Act. We believe that it would have been more beneficial to release the documents together, so consideration could have been given to how the reforms would operate "as a package". Nevertheless, we thank the government for giving us the opportunity to respond, at this stage.
B. Overview
Our position in relation to the position paper is mixed. Although we generally support the attempt made to simplify the process of valuing superannuation and the proposals of division, we have serious concerns with the way the current proposals are structured, as some approaches, by the Family Court that work well for women now, will be lost in the reform process.
For example, one approach that has worked well, is the option for some women to "trade" their superannuation entitlements for a greater percentage of the existing matrimonial assets. In many instances this is the only mechanism for women to retain the matrimonial home for themselves and their children. If the reforms restrict this approach or do not make it explicit in the legislation that the option continues to exist, then there is little doubt that the reforms will have a serious and detrimental impact on the economic outcomes for women and children, after separation.
It is clear that the position paper’s agenda is to use this scheme as a means of providing each person in Australia with a superannuation scheme. This will not always be in the best interests of women. There are concerns that administrative costs over the years could substantially reduce women’s future entitlement. This may occur if she if a full-time homemaker and cannot make her own financial contributions or where she has her own superannuation scheme but is unable to "roll over" her entitlement into her own scheme. Sometimes the future economic security of women is best achieved by allowing them greater access to existing assets.
Another serious concern is the attempt to ‘fetter the discretion’ of the court when considering the issue of division. The exceptions to the presumption of a 50:50 division of superannuation are too restrictive. The court must be able to apply Section 79(4) and Section 75(2) of the Family Law Act or have a have a "catch all" exception such as " where it is otherwise just and equitable". Although we understand that the intention is to achieve some certainty of outcome, the myriad of client circumstances that come before the court or present in mediations/ negotiations just can not be foreseen. If the exceptions are too restrictive on the exercise of the court’s discretion, there is little doubt that injustice will result. For women, where the property settlement in many instances represents there only chance of achieving some future economic security for themselves and their children, the consequences of such an outcome will be especially harmful.
C. Key Issues
Inconsistency of approaches between negotiated settlements and court orders?
The position paper advises that one of the key elements of negotiated settlements is the need for choice. On page 41, the paper provides "They (the parties) will be able to decide in what proportion they wish the superannuation to be divided. For example, they may decide to share the superannuation equally or that one of them will forego a share in the superannuation for a greater share in other property such as the family home. This may be necessary to ensure minimal disruption to the lives of any children they have."
In the negotiated settlements, women will be able to continue to "trade" their superannuation entitlement for a larger share of present assets. However, if the matter does not settle and proceeds to court, it would seem the court can not make an order for the woman to be compensated out of present assets, unless the matter comes within one of the 4 or 5 exceptions. Unless women have the ability to participate in such trades, there is little doubt that more family homes will have to be sold as many women will not be able to refinance to retain the family home. The economic and social consequences for women and children will be devastating.
The inconsistency in the government policy approach is difficult to understand. Traditionally settlements negotiated out of court are reached when the parties are aware that their agreement is within the accepted range a court would be likely to order, if the matter proceeded to trial. There is a consistency in approach, between the way solicitor’s negotiate on behalf of their clients and court decisions. Agreements are reached in the ‘shadow’ of court decisions. Solicitors and the legal system are used to approaching matters in this way.
The position paper confuses this ‘understood’ approach. It speaks about "choice" but only if the parties can reach agreement without the need for litigation. If the parties institute proceedings, the courts will have little choice in the way they make their decisions. The position paper envisages a system whereby the parties can mediate an agreement that would be impossible for the court to make. Although it is obvious the government is trying to steer people away from litigation, we are extremely concerned that this will have an adverse impact on women by restricting their ability to "trade" their future superannuation entitlement. Another concerning consequence of this is that women may accept less favourable negotiated agreements because they would prefer their entitlement to incorporate current assets rather than a future superannuation entitlement.
Solicitors advising their clients will look to the law for guidance. Unless the amendments are explicit about the ability to continue to reach agreements including the ability to "trade", solicitors will negotiate within the 4 or 5 exceptions provided in the legislation. We are extremely concerned that the position paper’s "catchcry" of more choice will, for all practical purposes will be prove to be a fallacy for women.
As we previously advised, we prefer an approach whereby the court’s discretion is not restricted and the principles encompassed within Sections 79 and 75(2) apply to superannuation. These principles have been operating now for over 23 years. Case law has further defined them. Solicitors can generally advise their clients, with some certainty about likely outcomes. As an alternative to a 50:50 presumption, perhaps an amendment could be made to Sections 79 or 75(2), requiring the court to also consider ‘the parties need to secure future retirement income’.
The exceptions to the 50:50 presumption
If the government proceeds with the presumption of 50:50, then in relation to the exceptions we would like to make the following comments-:
We are extremely concerned that the requirement in this exception, to establish ‘serious disruption to care arrangements, is too onerous and will exclude a large number of women and will force the sale of the family home. For example, will it be a ‘serious’ disruption if the children are 17 and 18 years, living at home and attending university.
Again, the inconsistency of approaches between court orders and mediated agreements is highlighted. On page 41 a woman is able to trade her superannuation entitlement for a greater interest in the house. The Paper explains that "this may be necessary to ensure minimal disruption to the lives of any children".
If the same woman is unable to reach agreement with her husband, through no fault of her own and she institutes court proceedings, she is penalised. She now has a much more difficult onus to prove. To obtain a court order in similar terms to the mediated agreement, she will have to prove that the selling of the house would cause a ‘serious disruption to the care arrangements of the children’.
B. The Need for an Additional Exception
There is a need for an additional exception - "where it is otherwise just and equitable".
As we advised in our overview, it is impossible for legislators to legislate to cover every conceivable situation.
It is necessary therefore for the court to have an overarching discretion to make decisions that are just and equitable in the circumstances of the case. This should include the ability to award one party more than 50% of the superannuation. For example, if the only substantial asset is the superannuation and after separation the woman continues to care for children or where the woman experiences health problems, the court should have the ability to order that she be entitled to a greater than 50% portion of the superannuation.
Only if this further exception was included would many older women be protected. Under the current proposal, an older woman who has been the full-time homemaker, no longer has dependent children and is unable to enter the workplace would be required to sell the matrimonial home if there were not enough other available assets.
The position paper has not considered the issue of domestic violence at all because it does not provide any avenues for women who are unable to negotiate with their former spouse where there has been a history of violence. The emphasis is on separating parties being encouraged to make their own arrangements. One way parties are encouraged to do this is by attending a Commonwealth funded mediation agency. These agencies follow Commonwealth mediation guidelines and domestic violence is an exemption to conducting mediations. Of course the reality is, even though mediation guidelines provide for an exemption, mediations are still conducted when there has been a history of domestic violence.
If a woman who has experienced domestic violence is exempted from mediation or if she cannot reach agreement with her husband, then her only other real option is litigation. A violent man who has terrorised his former spouse and children with abusive and controlling behaviour will rarely be ‘reasonable’ in negotiations. It is not the fault of these women that they must resort to litigation in order to seek a just outcome. For many women the court decision is the only opportunity to achieve such an outcome. The courts must be given the ability to exercise their discretion in a just and equitable manner and as the circumstances of the case require, or these women and their children will continue to suffer injustice.
It is absolutely necessary, if the government is serious about improving the economic position of women that additional funds are provided to Legal Aid, so that they can afford to fund women to initiate or respond to proceedings in the court and in circumstances where mediations fail, for any reason. This is especially important where there has been domestic violence and where the nature of the case means that a woman is unable to get a solicitor to act on her behalf or to ‘speculate their fees’. eg. where there are no assets but a large superannuation fund. Unless these additional funds are provided many women in these circumstances will continue to ‘walk away’ with nothing, as they do not have the strength or the confidence to conduct their own court proceedings.
Similarly to the other property provisions in the Family Law Act, the value of superannuation should be calculated from the date of cohabitation until the date of the property settlement and not the date of separation. If separation is the ‘cut-off’ date, then it leaves the way open for husbands to transfer assets or divert income into their superannuation schemes after separation and before the final property settlement.
There needs to be a requirement, at law to disclose all interests in superannuation schemes.
In relation to the suggested mechanism for information being provided to the other party, the information should be provided to that person without the need for the superannuated party’s consent. With the massive cuts in legal aid, many women are left with no option but to conduct their own negotiations and litigation. In cases involving domestic violence it can be extremely difficult and traumatic for the women to be able to get their husbands to agree to anything, even the signing of a form. The trustees should be able to provide the information about the fund directly to the woman without the husband’s authority.
When the parties have reached agreement about superannuation they should be required to sign a declaration additional to those outlined on page 48, swearing to the fact that they have made a full and frank disclosure to their spouse of all their interests in superannuation schemes.
The Family Court should be able to set aside the agreement, not only in circumstances of fraud and duress but also where there has been a non-disclosure of a fund or of an asset.
Similarly to property settlements, there should be an obligation on the Family Court to scrutinize agreements for fairness. Independent evidence about the superannuation entitlements should be provided to the Court.
The government should be more pro-active in its approach to the constitutional difficulties in legislating for defacto relationships. A concerted effort should be made at SCAG level either to place pressure on the States to legislate in this area or on the States to refer their constitutional powers to the Commonwealth.
Women's Legal Service, Brisbane
PO Box 119 Annerley QLD 4130
ph: 07 33920670
fax: 07 33920658
email: wlsi@gil.com.au
NATIONAL WOMEN'S JUSTICE COALITION
email: nwjc@nwjc.org.au
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